How Debit Card Foreign Transaction Fees Work - NerdWallet (2024)

FAQs

Does a debit card charge foreign transaction fees? ›

Foreign transaction fees can add up fast when using your debit card abroad. The fees are often 1% to 3% of the amount of a purchase, and many banks also apply the fee to ATM withdrawals.

A foreign transaction fee is imposed by a credit card issuer on a transaction that takes place overseas or with a foreign merchant. These fees are typically 1%–3% of the value of the transaction and are paid by U.S. travelers in dollars.

Foreign transaction fees are a surcharge credit card holders pay for transactions processed outside of the U.S. These can be purchases you make while traveling abroad or even online spending from a merchant based overseas.

Foreign ATM and transaction fees

Foreign transaction fee: Sometimes called a currency conversion fee, this applies for foreign transactions made with a debit card. It usually ranges from 1% to 3% of the purchase amount. Foreign transaction fees for credit cards work similarly.

These fees can be avoided by choosing a bank account that doesn't charge fees and reimburses out-of-network ATM fees and by always withdrawing local currency from ATMs. Account holders can also ask their home bank if there are partner branches or in-network ATMs in the destination country or countries.

Credit and debit cards are some of the easiest ways to pay for goods and services while traveling internationally. You can avoid carrying large amounts of cash, benefit from your card's automatic currency conversion, and withdraw cash from ATMs as needed.

Yes, you can use your debit card internationally, though you may incur foreign transaction fees. Depending on where you travel, you might find merchants that only accept cash — or may only accept cards from specific issuers — so it's a good idea to have a mix of payment methods with you.

Credit card transaction fees are typically higher than debit cards. Shops may charge a fee, and banks may charge a conversion fee for the payment. If the merchant hasn't displayed fee notices, travelers should inquire with the staff. Credit cards may be subject to ghost charges or temporary holds.

Using debit cards overseas

Debit cards are ideal for controlling your cash flow, to avoid coming home to a nasty credit card bill. They are widely accepted.

Foreign transaction fees are placed on purchases made using a credit or debit card in a country other than the U.S. Ostensibly, this charge is meant to compensate the purchaser's bank for converting the funds into a foreign currency. These fees are often percentage-based and are common on most cards.

What is the best debit card for overseas travel? ›

On top of the margin added to the exchange rate, you might also have to pay a foreign transaction fee when you spend overseas using your Visa debit card. This is a charge for using your card in another country. It may be a flat fee, but it's usually a percentage of the amount you spend.

While there are some situations where it may make sense to use DCCs, it's usually better to pay in the local currency – especially if you use a credit card that doesn't charge foreign transaction fees.

Avoid exchanging money at airports and hotels - they usually have the worst rates. If you want to withdraw cash from an ATM when you're abroad, always do it in the local currency. This guarantees the mid-market rate. However, your bank may charge ATM fees and foreign transaction fees (more on this later).

Research shows that in most cases you can save by opting to spend in the local currency. For example, that would mean choosing euros in Spain or dollars in the US. When you choose to pay in the currency of the region or country you're visiting, Visa or Mastercard will set the exchange rate.

Using foreign exchange services before you fly

Exchanging cash in advance before your trip is often one of the best ways to spend money abroad. It will avoid you having to pay poor exchange rates at certain airports, especially if you don't know what their rates will be before you leave for your trip.

Should You Use Cash or Credit When Traveling to Europe? Most international travelers will end up using a combination of cash and cards when visiting Europe. While credit cards are accepted in most situations, currency can be more convenient for public transportation and small vendors.

Do I need to tell credit card I'm going abroad? ›

You're not required to notify your credit card company when you're going away on vacation, but it is highly recommended. By letting your credit card company know where you're going and for how long, your company will know that any card transactions from that location were likely authorized by you.

You could be charged a foreign transaction fee if: A purchase occurs from a merchant located outside the U.S. A purchase is in a foreign currency. A purchase is routed through a foreign bank (sometimes even when it's charged in U.S. dollars)

If a card charges a foreign transaction fee, it will be listed in the card's terms and conditions. The 10 largest credit card companies all offer at least some cards without foreign transaction fees. Plus, some issuers don't charge these fees on any of their credit cards.

Essentially, an international debit card is not a separate card – it is your local debit card with global access. You need to activate your local debit card for international transactions before travelling abroad.

Advantages of an overseas card

The main advantage of using a debit or credit card overseas is that you won't pay foreign transaction fees every time you spend. While many also won't charge fees for cash withdrawals, you will still usually be charged interest from the date of the transaction if you use a credit card.

A Bank of America International Transaction Fee of 3% will apply when converting your currency. 9 • If you have any issues with your cards while traveling, please call the number on the back of your card.

No interest, No annual fee, No monthly bill

A Visa Debit card has these benefits in common with a regular debit card — because these are not credit transactions they are not charged interest, and do not get forgotten until a surprising bill comes in the mail.

It is better to use a credit card than a debit card on vacation because credit cards are more secure and more likely to help you earn rewards while you're away from home.

What is the best way to pay for things when traveling internationally? ›

Using credit cards for purchases when possible and using ATMs to get local currency for when you need to pay cash are by far the best ways to pay for things when abroad because you will get the wholesale exchange rate rather than the less favorable retail rate posted in currency exchange facilities or at bank teller ...

Yes. However, it's a good idea to let your bank know first if you're traveling outside the country. If not, you risk the card being shut down due to the stringent security measures in place to keep your account safe. Be on alert for potential pickpockets while on a trip.

You can manage spending better

If you find yourself struggling to pay off your credit card, using a debit card may be a better way to manage overspending. “If you have credit card debt, then putting routine purchases on a debit card would make sense in order to avoid going deeper into debt.